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It's an ingenious solution to achieve a "trustless" currency that prevents double-spending without a central authority. Unfortunately, this solves the wrong pro

by fsh 10mo ago

It's an ingenious solution to achieve a "trustless" currency that prevents double-spending without a central authority. Unfortunately, this solves the wrong problem. Spending money usually involves getting a good or service in return, which inherently requires "trust" (as does any human interaction). Your fancy blockchain is not going to help you if you order something with Bitcoin and no package arrives.

snapplebobapple 10mo ago
Neither will cash. Thats what a third party escrow is for. You get that as part of what you pay for a credit card. Not trying to come down on either side of this i personally hold near zero crypto, your statement was just wrong.
- fsh 10mo ago
  Indeed, most societies ended up inventing a mandatory trusted third party escrow called a "legal system" as part of a "state". They usually issue hard-to-copy tokens, solving the double spending problem.
  - charcircuit 10mo ago
    Most states still haven't created digital versions of these hard-to-copy tokens meaning that there needs to be an alternate provided by a 3rd party which is where cryptocurrency comes in.
    - bawolff 10mo ago
      Most states have in fact invented bank transfers for that purpose.
      - charcircuit 10mo ago
        The decentralized nature of banks makes it hard to offer a good payment experience to consumers and businesses.
        walthamstow 10mo ago
        Inside the same country, really? We have the aptly-named Faster Payments in the UK and it's instant. The company I work for is virtually built upon it. https://en.wikipedia.org/wiki/Faster_Payment_System_%28United_Kingdom https://en.wikipedia.org/wiki/Faster_Payment_System_%28Unite...
        bawolff 10mo ago
        Only in America. The rest of the world figured it out.
        disgruntledphd2 10mo ago
        To be fair, this is because the US figured this stuff out way earlier through credit cards, and now there's a bunch of stakeholders and legacy changes which get in the way of making the services better.
        FabHK 10mo ago
        Indeed, and there are some good reasons, too: US regulators want to prop up smaller regional banks and avoid large national monopolies (for what is essentially a natural monopoly). The externalities of the crappy US banking system are so vast though. Musk, crypto, ...
        KellyCriterion 10mo ago
        SEPA is among the most stable & robust payment areas globally with a lot of interesting features which a lot of other regions are jealous about :-) And there are additional layers built on top, so at least we have N=1, while I have to admit that convenience could & should be improved
    - delusional 10mo ago
      The states (or rather the national banks of said states) are usually the ones running the central clearing system. That's the place where all the different banks report their net change in relation to all the other banks, and settle that change on their account with the central bank. Believe it or not, banks don't ferry around cash to each other. It's all just numbers in a computer.
    - johncolanduoni 10mo ago
      The Fed has had a wire service (Fedwire) for banks, allowing them to transfer their balances on the Fed’s balance sheet to another bank during settlement, since before the dollar moved off the gold standard. It was initially done with literal telegraphs - not sure at what point it became digital. It obviously has no pseudo anonymity, is literally the least democratized banking system in existence, and is subject to the government’s whims in a whole host of ways. But it is a digital ledger of massive sums of real dollars (the banks can ask for it in cash if need be), and you couldn’t really steal the money even if you managed to create an unauthorized transfer on some bank’s master account.
      - lmm 10mo ago
        > the banks can ask for it in cash if need be Ehhh, can they? I suspect any bank that tried would pretty soon find that it actually couldn't.
        johncolanduoni 10mo ago
        They couldn’t get their whole balance in cash I’m sure. But the Fed is the one that handles retiring old paper currency and giving banks fresh currency to give to ATMs and tellers, and I doubt the inflows and outflows are perfectly even for each bank.
        lazide 10mo ago
        The Fed manages printed currency - they’d be irritated, but they literally do provide the physical dollars people need now, and if they felt it was appropriate, they’d produce them as needed. Just like those airplanes of bills shipped to Iraq, etc. in the past.
        squillion 10mo ago
        I think we’re talking about bank reserves, which is a fraction (in the order of 1%) of the total amount of money held in the customers’ transaction accounts. Reserves are convertible into cash. Not that any bank would suddenly want to do that, unless there’s a bank run, in which case it’s the customers who want the entirety of their accounts (100x the reserves) converted into cash, which is impossible not because the fed refuses to convert the money, but because the bank doesn’t have enough reserves.
  - njarboe 10mo ago
    And put people in jail they catch making and using fake ones.
  - jimmaswell 10mo ago
    Putting absolute trust and surrendering too much agency to the state has been proven a mistake many times throughout history. Citizens need fallbacks when the state fails them. Concrete example where crypto achieves this: many trans people in places with an inadequate medical system or hostile government turn to buying gray-market DIY hormones online, facilitated by crypto.
    - johncolanduoni 10mo ago
      Sure, but approximately zero of the actual crypto space/hype was built around facilitating this kind of thing. In fact for that use case, it would’ve been better if Bitcoin never got nearly as big as it has (since that lead to much more government scrutiny, all over the world). Ideally it would’ve gotten large enough that there were enough reputable-ish exchanges that you could move fiat in and out, and then stopped there. Like some sort of digital Hawala.
    - walthamstow 10mo ago
      I also use crypto to bypass government prohibition on unprescribed self-medication. Is it still noble if I'm buying cocaine?
      - AnthonyMouse 10mo ago
        Is it necessarily the case that it isn't? Suppose you can't afford health insurance and you have a condition for which a controlled substance would be prescribed, if you had access to the healthcare system, but you don't. If you then buy it over the internet, is the system being wronged by you or are you being wronged by the system?
      - krispyfi 10mo ago
        The war on drugs is a scam. Cocaine prohibition is a pretext to oppress indigenous peoples of the Andes. https://filtermag.org/world-health-organization-coca-prohibition/amp/ https://filtermag.org/world-health-organization-coca-prohibi...
        10mo ago
  - aeternum 10mo ago
    They also confiscate those hard-to-copy tokens if you acquire a sufficiently large quantity and attempt to leave the country with them.
    - blackjack_ 10mo ago
      I see a lot of hand wringing about this; but for 99.99% of people the banking layer and bureaucracy of modern monetary systems is a feature that protects them from fraudulent transactions, people stealing their credit card number, and businesses charging them and not delivering goods. These are generally good things. Yes it is possible for the state to inflict violence on you, and if the state wants to, it probably will do so. Putting your money into internet tokens instead of state backed money will probably just get you tortured more until you give up the keys, or die. Crypto isn't some "one weird trick" to prevent the state from taking your property and possessions.
      - idkfasayer 10mo ago
        [dead]
      - AnthonyMouse 10mo ago
        > for 99.99% of people the banking layer and bureaucracy of modern monetary systems is a feature that protects them from fraudulent transactions, people stealing their credit card number, and businesses charging them and not delivering goods. These are generally good things. Let's go through these. To begin with, "fraudulent transactions" is redundant because that's either someone stealing your credit card number or someone you paid not doing what they said. So let's consider those two: > people stealing their credit card number This is the problem caused by the existing system, which is designed with such poor security that breaching a merchant allows the attackers to make charges to their innocent customers' cards at a different merchant. They get zero credit for providing a mitigation to the problem they created themselves. > businesses charging them and not delivering goods This gets sold as a benefit, but it's also a cost, because then it becomes a mechanism to commit fraud. People go to a business that does deliver the goods and issue a fraudulent chargeback. The merchants then have to pass the cost of that onto everyone else, which means that it's also a fraud against every other customer. Meanwhile we have other solutions to that problem that don't do that. Established businesses don't want to ruin their reputation. If someone rips you off you can sue them. Sometimes you're just paying someone for something they're already delivered. And most importantly, there instances when you would trust someone to deliver the goods independent of the payment system, and other instances when you wouldn't. Which is why you want both payment systems to be available instead of just the second one, so you don't have to pay for the chargeback fraud when you don't need to buy your trust from the payment system.
- bawolff 10mo ago
  > Not trying to come down on either side of this i personally hold near zero crypto, your statement was just wrong. Umm, you are agreeing with the person you are responding to.
- NickNaraghi 10mo ago
  I love watching the HN comment hivemind speedrun the history of blockchain innovation every time this comes up. You just reinvented smart contracts on Ethereum, keep going :-)
  - gavinsyancey 10mo ago
    No amount of smart contracts can solve the situation where one party says "I shipped you the widgets you ordered; pay me" and the other says "I received a box with a brick in it" -- you need some trusted third party to decide based on reasonable heuristics who is trying to commit fraud, based on e.g. is this the first or the tenth time this has happened.
    - pyrolistical 10mo ago
      That’s just a bad contract. Now consider one that mints you an NFT
      - bhickey 10mo ago
        I can't actually tell if you're touting monkey jpegs or making a really funny joke.
        forgotpwd16 10mo ago
        They agree with your statement in another reply under this submission. So a joke on crypto hype culture, where you either put aside problems and move to next craze or next craze is shoved to everything.
    - OneDeuxTriSeiGo 10mo ago
      That's exactly the point of smart contracts. The contract can hold the money in escrow such that it can only be sent either to the seller or returned to buyer. The seller and buyer can then both walk the contract through a state machine on agreement (i.e. confirm shipping, confirm delivery, potentially also confirmation for a return process) and when the buyer and seller come to a disagreement (ex: seller attests they've shipped the product and it should be delivered but the buyer asserts they havent/the tracking on shipping is invalid) or one of the participants is non-responsive for a certain amount of time then the contract moves into arbitration. In arbitration one or more third parties then step in to serve as arbiters/oracles that decide in the favor of one party or the other and commit those decisions to the contract and the contract then derives consensus from those decisions and proceeds to the corresponding state/action of the contract (i.e. refund vs close). Now your arbiters/oracles/third parties have reputations and you can reason about how trustworthy they are before you enter into the contract. This means all parties can evaluate their risk tolerance and trust levels before entering the contract/on agreement. ------- TLDR: Trust is inherent to any system reliant on the physical world. The point of smart contracts, etc is to formally encode those trust assumptions and the procedures of the contract in as trustless of a way as possible and to allow distribution of that trust across parties with most of the coordination overhead being automated/abstracted away. And importantly smart contracts provide an extremely low friction happy path. In the happy path where all parties are satisfied, it's extremely efficient and responsive. But in every other path, the conflicts, incentives, and resolution procedures are clearly defined for all parties involved.
HaZeust 10mo ago
I always thought it was actually an ingenious solution to elections. There's absolutely no reason that a driver's license can't derive a hash that can only be proven and not reversed (for identity); and provides a one-time contribution to a blockchain that contains your vote - which you then receive your block's information when you finish voting. ANYONE can calculate the sums, anyone can verify and proof hashes, identity is kept secret, trust is installed with hash checks for each and every voter - etc etc etc. It's certainly more airtight than the solution we have today - where trust and efficiency can both be compromised fairly easy.
- ramchip 10mo ago
  You're describing a transparency log, which doesn't require a blockchain.
  - HaZeust 10mo ago
    A transparency log, as I understand them, requires a centralized actor; which makes it easier to fudge numbers and introduce false participants.
    - henearkr 10mo ago
      No, because each participant can check its contribution in the log. Everybody gets a copy of a verifiable hash etc when voting, allowing voters to mathematically check their vote. The kind of knowledge allowing to design such clever algorithms is the real meaning of the word "crypto" (cryptography).
      - HaZeust 10mo ago
        I see what you're saying now, I was imagining the type of transparency log that's usually run by a single institution and audited by a few others. Even if every voter gets a hash and can check that their vote is in the log, you still have a bunch of places where a central actor can misbehave: Deciding who gets to write to the log in the first place, rate-limiting or dropping submissions, or running split-view logs in the event that there's not a ton of replication - hoping that wouldn't be the case in an election. With a (properly designed) blockchain, you at least push those assumptions into a consensus layer with many writers/validators and game-theory penalties for rewriting its history. It's still not magic; but for something like elections, I'd rather minimize the points where a single operator can tilt the playing field, which is why I was thinking "blockchain" instead of "centralized transparency log"
rjdj377dhabsn 10mo ago
Why should the method of payment solve that problem? A reputation system for sellers and service providers makes more sense to be entirely separate.
- culi 10mo ago
  except currently the main usecases for cryptocoins are to buy illicit goods and services online. I remember when OpenBazaar was a thing. It even somehow managed to get an iOS app despite it being ridiculously easy to find listings for lbs of cocaine
  - bloppe 10mo ago
    Ya, I'm not a big fan of that use case, and I agree it's a problem. But I hold Bitcoin as a hedge against inflation. It tends to do better than gold, and is way easier to transact and store.
AnthonyMouse 10mo ago
> Unfortunately, this solves the wrong problem. Spending money usually involves getting a good or service in return, which inherently requires "trust" (as does any human interaction). Your fancy blockchain is not going to help you if you order something with Bitcoin and no package arrives. That problem already has solutions. The problems cryptocurrency is supposed to solve are, I want to buy subversive literature from someone I already trust not to rip me off, or for an amount I'm not worried about losing, without anyone requiring me to give them a government ID. Or I want to sell it to people without requiring them to give anyone an ID. I want to donate money to Wikileaks. I want to commission art or software from someone in South America who doesn't have access to US banks. I have the same name as someone on a list and I want a way to move money without the government ruining my life. I live in an oppressive country and I want to finance the rebellion, or buy contraception or some other thing which is banned by the baddies when it ought not to be. It's for doing the things where the existing system fails you, not the things where it works. But it can do those things too. Cash works the same way. You're not worried about a restaurant stealing your money because by the time you pay them you've already eaten. You're not worried about Newegg sending you a brick with "lol" written on it instead of a GPU because they're a well-known company and if they did that it would cost them more in damage to their reputation than they'd gain from the theft and people would sue them independent of payment method. You don't always need your trust in other people to come from the payment system when it can come from a dozen other things instead.
- bhickey 10mo ago
  > I want to buy subversive literature from someone I already trust not to rip me off Subversive literature printed on blotter paper. Outside of buying sex and drugs the only uses for cryptocoins are, and always has been, ransoms, scams and gambling.
  - AnthonyMouse 10mo ago
    Okay, tell me how I buy something over the internet without tying the purchase to my government ID. Your argument seems like "only criminals want privacy" which is a no.
wisty 10mo ago
The issue isn't that it solves the wrong problem. The issue is that crypto boosters (including a few already here) claim it solves a whole host of other problems without thinking things through, kind of like some communists. Then if you argue enough they'll point out that things can be fixed ... but bitcoin is now indistinguishable from any other currency, other than its payment system that will no longer be widely used. Like, you can make it easy to use if there are banks. And those banks will be subject to regulations. Boom, now you have banks and regulations. You can get a loan from those banks. Now there's fractional reserve banking, with something like a virtual gold standard. If it ever gets big enough, the fed can write bitcoin denominated bonds, and it's now prerty much a fiat currency, not even virtual gold. Yes you still have a shadow sector where you can use bitcoin to buy drugs or dodge the taxman. But all the other supposed benefits have gone.
- immibis 10mo ago
  Ultra-capitalist libertarians are communists... riiiiiight... btw I was banned from r/bitcoin Discord for saying that exchanges are banks.
  - wisty 10mo ago
    Both are idealists, doomed to be forced to recreate worse versions of the solutions they think are problems if their dreams ever progess far enough to come into contact with reality. Things like banks and governments. Or incentives and heirarchy.
- Imustaskforhelp 10mo ago
  > Yes you still have a shadow sector where you can use bitcoin to buy drugs or dodge the taxman. But all the other supposed benefits have gone. You use monero to do those things or zano or freedomusd and similar things for these but I didnt understand the conclusion of this statement Basically you are saying crypto is just an less regulated fiat nowadays? A legal curry of tech jargon just meant to replace laws and regulations?
  - 10mo ago
voodooEntity 10mo ago
Reading your comment made me think of an ad i saw several years ago. It was an ad that started off like a typical quality coffee ad, nice pictures of beans, people harvesting, some roasting etc. But than it switched to the topic if making sure that "fair trade" was really applied - switching to IBM Blockchain and claiming that through the use of Blockchain there is safety that everything went fair trade..... And i just thought.... sure... your blockchain approves that those workers harvesting got paid fair... or does it? All it actually does is proof that someone inserted the information that they got paid fair. If it really happend? Noone knows. Therefor Blockchain is a representation of what you feed into it nothing more and nothing less. At the moment it touches real life - as in the fair trade/payment for coffee bean harvesting - especially in countries where alot of payment is still for dayjob/cash - there's no way the Blockchain can assure that everything went the way it is stored as.
- dotancohen 10mo ago
  I have not seen this scenario, but I assume that a blockchain could more reliably and believably be made public, recording all the way down to the farmer, then could other technologies. Blockchain enables transparency from the farmer to the consumer. It does not ensure that the farmer was not coerced.
  - troupo 10mo ago
    To make it simple to understand: For example, international conglomerate using exclusively slave labor inputs "these bananas are small farmers fair trade bananas" into blockchain. That's it. That is the "transparency".
    - dotancohen 10mo ago
      Right. That's a forgery - a lie. No blockchain could prevent that type of lie. What a blockchain could enable is honest transparency. An attempt to pass off a lie as truth would be much more damaging to a company's reputation than would be just not addressing an issue. By addressing the issue and introducing a channel for transparency, the company is demonstrating that they are willing to put their reputation on the line. I would agree that as a regulatory measure, this would not solve any problem. But as a self-imposed measure, it builds consumer trust.
oersted 10mo ago
I believe the “trustless” part is not having to trust a central authority that makes the transaction possible, not about not having to trust the person you are transacting with. With crypto you don’t need to trust the authority that holds your digital money, the authority that executes the transaction, or the authority that manages the issuance of currency and other factors that may affect its value (interest rates, fixed exchange rates…). That being said, I agree that in practice this is a rather niche problem to solve, and among the people with this problem, there are far more bad faith ones that good faith ones. And it is never completely trustless anyway, for most crypto you need to trust a single dodgy implementation, the issuance policy of the founders hoarding the vast majority of the tokens, and whatever backdoors they have put in place for disaster recovery or other purposes. And then there are all the surrounding systems that make crypto actually practical to use, like exchanges, that are absolutely not trustless. It’s absurd how the top exchanges keep their customers crypto in big joint accounts that the exchange controls and transactions mostly just happen in their closed database outside the blockchain, canceling out most advantages of crypto anyway.
FabHK 10mo ago
> Spending money usually involves getting a good or service in return, which inherently requires "trust" Indeed. Good paper driving the point home: Irrationality, Extortion, or Trusted Third-parties: Why it is Impossible to Buy and Sell Physical Goods Securely on the Blockchain http://arxiv.org/abs/2110.09857 http://arxiv.org/abs/2110.09857

by fsh 10mo ago

snapplebobapple 10mo ago

Neither will cash. Thats what a third party escrow is for. You get that as part of what you pay for a credit card. Not trying to come down on either side of this i personally hold near zero crypto, your statement was just wrong.

fsh 10mo ago
Indeed, most societies ended up inventing a mandatory trusted third party escrow called a "legal system" as part of a "state". They usually issue hard-to-copy tokens, solving the double spending problem.
- charcircuit 10mo ago
  Most states still haven't created digital versions of these hard-to-copy tokens meaning that there needs to be an alternate provided by a 3rd party which is where cryptocurrency comes in.
  - bawolff 10mo ago
    Most states have in fact invented bank transfers for that purpose.
    - charcircuit 10mo ago
      The decentralized nature of banks makes it hard to offer a good payment experience to consumers and businesses.
      - walthamstow 10mo ago
        Inside the same country, really? We have the aptly-named Faster Payments in the UK and it's instant. The company I work for is virtually built upon it. https://en.wikipedia.org/wiki/Faster_Payment_System_%28United_Kingdom https://en.wikipedia.org/wiki/Faster_Payment_System_%28Unite...
      - bawolff 10mo ago
        Only in America. The rest of the world figured it out.
        disgruntledphd2 10mo ago
        To be fair, this is because the US figured this stuff out way earlier through credit cards, and now there's a bunch of stakeholders and legacy changes which get in the way of making the services better.
        FabHK 10mo ago
        Indeed, and there are some good reasons, too: US regulators want to prop up smaller regional banks and avoid large national monopolies (for what is essentially a natural monopoly). The externalities of the crappy US banking system are so vast though. Musk, crypto, ...
      - KellyCriterion 10mo ago
        SEPA is among the most stable & robust payment areas globally with a lot of interesting features which a lot of other regions are jealous about :-) And there are additional layers built on top, so at least we have N=1, while I have to admit that convenience could & should be improved
  - delusional 10mo ago
    The states (or rather the national banks of said states) are usually the ones running the central clearing system. That's the place where all the different banks report their net change in relation to all the other banks, and settle that change on their account with the central bank. Believe it or not, banks don't ferry around cash to each other. It's all just numbers in a computer.
  - johncolanduoni 10mo ago
    The Fed has had a wire service (Fedwire) for banks, allowing them to transfer their balances on the Fed’s balance sheet to another bank during settlement, since before the dollar moved off the gold standard. It was initially done with literal telegraphs - not sure at what point it became digital. It obviously has no pseudo anonymity, is literally the least democratized banking system in existence, and is subject to the government’s whims in a whole host of ways. But it is a digital ledger of massive sums of real dollars (the banks can ask for it in cash if need be), and you couldn’t really steal the money even if you managed to create an unauthorized transfer on some bank’s master account.
    - lmm 10mo ago
      > the banks can ask for it in cash if need be Ehhh, can they? I suspect any bank that tried would pretty soon find that it actually couldn't.
      - johncolanduoni 10mo ago
        They couldn’t get their whole balance in cash I’m sure. But the Fed is the one that handles retiring old paper currency and giving banks fresh currency to give to ATMs and tellers, and I doubt the inflows and outflows are perfectly even for each bank.
      - lazide 10mo ago
        The Fed manages printed currency - they’d be irritated, but they literally do provide the physical dollars people need now, and if they felt it was appropriate, they’d produce them as needed. Just like those airplanes of bills shipped to Iraq, etc. in the past.
      - squillion 10mo ago
        I think we’re talking about bank reserves, which is a fraction (in the order of 1%) of the total amount of money held in the customers’ transaction accounts. Reserves are convertible into cash. Not that any bank would suddenly want to do that, unless there’s a bank run, in which case it’s the customers who want the entirety of their accounts (100x the reserves) converted into cash, which is impossible not because the fed refuses to convert the money, but because the bank doesn’t have enough reserves.
- njarboe 10mo ago
  And put people in jail they catch making and using fake ones.
- jimmaswell 10mo ago
  Putting absolute trust and surrendering too much agency to the state has been proven a mistake many times throughout history. Citizens need fallbacks when the state fails them. Concrete example where crypto achieves this: many trans people in places with an inadequate medical system or hostile government turn to buying gray-market DIY hormones online, facilitated by crypto.
  - johncolanduoni 10mo ago
    Sure, but approximately zero of the actual crypto space/hype was built around facilitating this kind of thing. In fact for that use case, it would’ve been better if Bitcoin never got nearly as big as it has (since that lead to much more government scrutiny, all over the world). Ideally it would’ve gotten large enough that there were enough reputable-ish exchanges that you could move fiat in and out, and then stopped there. Like some sort of digital Hawala.
  - walthamstow 10mo ago
    I also use crypto to bypass government prohibition on unprescribed self-medication. Is it still noble if I'm buying cocaine?
    - AnthonyMouse 10mo ago
      Is it necessarily the case that it isn't? Suppose you can't afford health insurance and you have a condition for which a controlled substance would be prescribed, if you had access to the healthcare system, but you don't. If you then buy it over the internet, is the system being wronged by you or are you being wronged by the system?
    - krispyfi 10mo ago
      The war on drugs is a scam. Cocaine prohibition is a pretext to oppress indigenous peoples of the Andes. https://filtermag.org/world-health-organization-coca-prohibition/amp/ https://filtermag.org/world-health-organization-coca-prohibi...
      - 10mo ago
- aeternum 10mo ago
  They also confiscate those hard-to-copy tokens if you acquire a sufficiently large quantity and attempt to leave the country with them.
  - blackjack_ 10mo ago
    I see a lot of hand wringing about this; but for 99.99% of people the banking layer and bureaucracy of modern monetary systems is a feature that protects them from fraudulent transactions, people stealing their credit card number, and businesses charging them and not delivering goods. These are generally good things. Yes it is possible for the state to inflict violence on you, and if the state wants to, it probably will do so. Putting your money into internet tokens instead of state backed money will probably just get you tortured more until you give up the keys, or die. Crypto isn't some "one weird trick" to prevent the state from taking your property and possessions.
    - idkfasayer 10mo ago
      [dead]
    - AnthonyMouse 10mo ago
      > for 99.99% of people the banking layer and bureaucracy of modern monetary systems is a feature that protects them from fraudulent transactions, people stealing their credit card number, and businesses charging them and not delivering goods. These are generally good things. Let's go through these. To begin with, "fraudulent transactions" is redundant because that's either someone stealing your credit card number or someone you paid not doing what they said. So let's consider those two: > people stealing their credit card number This is the problem caused by the existing system, which is designed with such poor security that breaching a merchant allows the attackers to make charges to their innocent customers' cards at a different merchant. They get zero credit for providing a mitigation to the problem they created themselves. > businesses charging them and not delivering goods This gets sold as a benefit, but it's also a cost, because then it becomes a mechanism to commit fraud. People go to a business that does deliver the goods and issue a fraudulent chargeback. The merchants then have to pass the cost of that onto everyone else, which means that it's also a fraud against every other customer. Meanwhile we have other solutions to that problem that don't do that. Established businesses don't want to ruin their reputation. If someone rips you off you can sue them. Sometimes you're just paying someone for something they're already delivered. And most importantly, there instances when you would trust someone to deliver the goods independent of the payment system, and other instances when you wouldn't. Which is why you want both payment systems to be available instead of just the second one, so you don't have to pay for the chargeback fraud when you don't need to buy your trust from the payment system.
bawolff 10mo ago
> Not trying to come down on either side of this i personally hold near zero crypto, your statement was just wrong. Umm, you are agreeing with the person you are responding to.
NickNaraghi 10mo ago
I love watching the HN comment hivemind speedrun the history of blockchain innovation every time this comes up. You just reinvented smart contracts on Ethereum, keep going :-)
- gavinsyancey 10mo ago
  No amount of smart contracts can solve the situation where one party says "I shipped you the widgets you ordered; pay me" and the other says "I received a box with a brick in it" -- you need some trusted third party to decide based on reasonable heuristics who is trying to commit fraud, based on e.g. is this the first or the tenth time this has happened.
  - pyrolistical 10mo ago
    That’s just a bad contract. Now consider one that mints you an NFT
    - bhickey 10mo ago
      I can't actually tell if you're touting monkey jpegs or making a really funny joke.
      - forgotpwd16 10mo ago
        They agree with your statement in another reply under this submission. So a joke on crypto hype culture, where you either put aside problems and move to next craze or next craze is shoved to everything.
  - OneDeuxTriSeiGo 10mo ago
    That's exactly the point of smart contracts. The contract can hold the money in escrow such that it can only be sent either to the seller or returned to buyer. The seller and buyer can then both walk the contract through a state machine on agreement (i.e. confirm shipping, confirm delivery, potentially also confirmation for a return process) and when the buyer and seller come to a disagreement (ex: seller attests they've shipped the product and it should be delivered but the buyer asserts they havent/the tracking on shipping is invalid) or one of the participants is non-responsive for a certain amount of time then the contract moves into arbitration. In arbitration one or more third parties then step in to serve as arbiters/oracles that decide in the favor of one party or the other and commit those decisions to the contract and the contract then derives consensus from those decisions and proceeds to the corresponding state/action of the contract (i.e. refund vs close). Now your arbiters/oracles/third parties have reputations and you can reason about how trustworthy they are before you enter into the contract. This means all parties can evaluate their risk tolerance and trust levels before entering the contract/on agreement. ------- TLDR: Trust is inherent to any system reliant on the physical world. The point of smart contracts, etc is to formally encode those trust assumptions and the procedures of the contract in as trustless of a way as possible and to allow distribution of that trust across parties with most of the coordination overhead being automated/abstracted away. And importantly smart contracts provide an extremely low friction happy path. In the happy path where all parties are satisfied, it's extremely efficient and responsive. But in every other path, the conflicts, incentives, and resolution procedures are clearly defined for all parties involved.

HaZeust 10mo ago

I always thought it was actually an ingenious solution to elections. There's absolutely no reason that a driver's license can't derive a hash that can only be proven and not reversed (for identity); and provides a one-time contribution to a blockchain that contains your vote - which you then receive your block's information when you finish voting. ANYONE can calculate the sums, anyone can verify and proof hashes, identity is kept secret, trust is installed with hash checks for each and every voter - etc etc etc. It's certainly more airtight than the solution we have today - where trust and efficiency can both be compromised fairly easy.

ramchip 10mo ago
You're describing a transparency log, which doesn't require a blockchain.
- HaZeust 10mo ago
  A transparency log, as I understand them, requires a centralized actor; which makes it easier to fudge numbers and introduce false participants.
  - henearkr 10mo ago
    No, because each participant can check its contribution in the log. Everybody gets a copy of a verifiable hash etc when voting, allowing voters to mathematically check their vote. The kind of knowledge allowing to design such clever algorithms is the real meaning of the word "crypto" (cryptography).
    - HaZeust 10mo ago
      I see what you're saying now, I was imagining the type of transparency log that's usually run by a single institution and audited by a few others. Even if every voter gets a hash and can check that their vote is in the log, you still have a bunch of places where a central actor can misbehave: Deciding who gets to write to the log in the first place, rate-limiting or dropping submissions, or running split-view logs in the event that there's not a ton of replication - hoping that wouldn't be the case in an election. With a (properly designed) blockchain, you at least push those assumptions into a consensus layer with many writers/validators and game-theory penalties for rewriting its history. It's still not magic; but for something like elections, I'd rather minimize the points where a single operator can tilt the playing field, which is why I was thinking "blockchain" instead of "centralized transparency log"

rjdj377dhabsn 10mo ago

Why should the method of payment solve that problem? A reputation system for sellers and service providers makes more sense to be entirely separate.

culi 10mo ago
except currently the main usecases for cryptocoins are to buy illicit goods and services online. I remember when OpenBazaar was a thing. It even somehow managed to get an iOS app despite it being ridiculously easy to find listings for lbs of cocaine
- bloppe 10mo ago
  Ya, I'm not a big fan of that use case, and I agree it's a problem. But I hold Bitcoin as a hedge against inflation. It tends to do better than gold, and is way easier to transact and store.

AnthonyMouse 10mo ago

> Unfortunately, this solves the wrong problem. Spending money usually involves getting a good or service in return, which inherently requires "trust" (as does any human interaction). Your fancy blockchain is not going to help you if you order something with Bitcoin and no package arrives. That problem already has solutions. The problems cryptocurrency is supposed to solve are, I want to buy subversive literature from someone I already trust not to rip me off, or for an amount I'm not worried about losing, without anyone requiring me to give them a government ID. Or I want to sell it to people without requiring them to give anyone an ID. I want to donate money to Wikileaks. I want to commission art or software from someone in South America who doesn't have access to US banks. I have the same name as someone on a list and I want a way to move money without the government ruining my life. I live in an oppressive country and I want to finance the rebellion, or buy contraception or some other thing which is banned by the baddies when it ought not to be. It's for doing the things where the existing system fails you, not the things where it works. But it can do those things too. Cash works the same way. You're not worried about a restaurant stealing your money because by the time you pay them you've already eaten. You're not worried about Newegg sending you a brick with "lol" written on it instead of a GPU because they're a well-known company and if they did that it would cost them more in damage to their reputation than they'd gain from the theft and people would sue them independent of payment method. You don't always need your trust in other people to come from the payment system when it can come from a dozen other things instead.

bhickey 10mo ago
> I want to buy subversive literature from someone I already trust not to rip me off Subversive literature printed on blotter paper. Outside of buying sex and drugs the only uses for cryptocoins are, and always has been, ransoms, scams and gambling.
- AnthonyMouse 10mo ago
  Okay, tell me how I buy something over the internet without tying the purchase to my government ID. Your argument seems like "only criminals want privacy" which is a no.

wisty 10mo ago

The issue isn't that it solves the wrong problem. The issue is that crypto boosters (including a few already here) claim it solves a whole host of other problems without thinking things through, kind of like some communists. Then if you argue enough they'll point out that things can be fixed ... but bitcoin is now indistinguishable from any other currency, other than its payment system that will no longer be widely used. Like, you can make it easy to use if there are banks. And those banks will be subject to regulations. Boom, now you have banks and regulations. You can get a loan from those banks. Now there's fractional reserve banking, with something like a virtual gold standard. If it ever gets big enough, the fed can write bitcoin denominated bonds, and it's now prerty much a fiat currency, not even virtual gold. Yes you still have a shadow sector where you can use bitcoin to buy drugs or dodge the taxman. But all the other supposed benefits have gone.

immibis 10mo ago
Ultra-capitalist libertarians are communists... riiiiiight... btw I was banned from r/bitcoin Discord for saying that exchanges are banks.
- wisty 10mo ago
  Both are idealists, doomed to be forced to recreate worse versions of the solutions they think are problems if their dreams ever progess far enough to come into contact with reality. Things like banks and governments. Or incentives and heirarchy.
Imustaskforhelp 10mo ago
> Yes you still have a shadow sector where you can use bitcoin to buy drugs or dodge the taxman. But all the other supposed benefits have gone. You use monero to do those things or zano or freedomusd and similar things for these but I didnt understand the conclusion of this statement Basically you are saying crypto is just an less regulated fiat nowadays? A legal curry of tech jargon just meant to replace laws and regulations?
- 10mo ago

voodooEntity 10mo ago

Reading your comment made me think of an ad i saw several years ago. It was an ad that started off like a typical quality coffee ad, nice pictures of beans, people harvesting, some roasting etc. But than it switched to the topic if making sure that "fair trade" was really applied - switching to IBM Blockchain and claiming that through the use of Blockchain there is safety that everything went fair trade..... And i just thought.... sure... your blockchain approves that those workers harvesting got paid fair... or does it? All it actually does is proof that someone inserted the information that they got paid fair. If it really happend? Noone knows. Therefor Blockchain is a representation of what you feed into it nothing more and nothing less. At the moment it touches real life - as in the fair trade/payment for coffee bean harvesting - especially in countries where alot of payment is still for dayjob/cash - there's no way the Blockchain can assure that everything went the way it is stored as.

dotancohen 10mo ago
I have not seen this scenario, but I assume that a blockchain could more reliably and believably be made public, recording all the way down to the farmer, then could other technologies. Blockchain enables transparency from the farmer to the consumer. It does not ensure that the farmer was not coerced.
- troupo 10mo ago
  To make it simple to understand: For example, international conglomerate using exclusively slave labor inputs "these bananas are small farmers fair trade bananas" into blockchain. That's it. That is the "transparency".
  - dotancohen 10mo ago
    Right. That's a forgery - a lie. No blockchain could prevent that type of lie. What a blockchain could enable is honest transparency. An attempt to pass off a lie as truth would be much more damaging to a company's reputation than would be just not addressing an issue. By addressing the issue and introducing a channel for transparency, the company is demonstrating that they are willing to put their reputation on the line. I would agree that as a regulatory measure, this would not solve any problem. But as a self-imposed measure, it builds consumer trust.

oersted 10mo ago

I believe the “trustless” part is not having to trust a central authority that makes the transaction possible, not about not having to trust the person you are transacting with. With crypto you don’t need to trust the authority that holds your digital money, the authority that executes the transaction, or the authority that manages the issuance of currency and other factors that may affect its value (interest rates, fixed exchange rates…). That being said, I agree that in practice this is a rather niche problem to solve, and among the people with this problem, there are far more bad faith ones that good faith ones. And it is never completely trustless anyway, for most crypto you need to trust a single dodgy implementation, the issuance policy of the founders hoarding the vast majority of the tokens, and whatever backdoors they have put in place for disaster recovery or other purposes. And then there are all the surrounding systems that make crypto actually practical to use, like exchanges, that are absolutely not trustless. It’s absurd how the top exchanges keep their customers crypto in big joint accounts that the exchange controls and transactions mostly just happen in their closed database outside the blockchain, canceling out most advantages of crypto anyway.

FabHK 10mo ago

> Spending money usually involves getting a good or service in return, which inherently requires "trust" Indeed. Good paper driving the point home: Irrationality, Extortion, or Trusted Third-parties: Why it is Impossible to Buy and Sell Physical Goods Securely on the Blockchain http://arxiv.org/abs/2110.09857 http://arxiv.org/abs/2110.09857